Agenda item

10.1

The purpose of the paper proposed a price increase in October 2022 for Community heating charges; to mitigate the risk that the significant energy price changes over the last 6 months has now put on the Community Heating Account.

The current energy crisis puts Sheffield City Council and many other authorities in a very challenging position, the point at which we forecast costs for this year was at a point at which the true cost of gas was still largely unknown. Forecasts ranged daily with a lack of any certainty at a fixed point. A price increase was recommended to full cabinet based on the information at the time which was an assumed increase of 37%. The actual increase is now 107%. Charges are still fluctuating as the crisis is ongoing and further increase will be needed next year.

If charges to customers are not increased, the current forecast estimates that there will be a short fall of more than £1 million, by the end of the current financial year in the community heating account, which would need to be supported by the HRA or General Fund, until it could be recovered.

10.2

RESOLVED: That Housing Policy Committee:-

1.     Approve that the standing rate change remains fixed at £4.90 per week for the duration of the financial year and the kWh charge is increased from 5.69p per kWh to 12p per kWh from October 2022.

10.3

Reasons for Decision

10.3.1

It is widely documented that the energy price cap will be increased again in October, whilst community heating does not fall under the price cap at this time, it is a clear point for all other customers that at this stage they can expect to see prices increase. Consumption is also at the lowest in the summer months and changing prices now will not have as much impact. The recommendation to increase the prices is required to relieve the pressure on the Housing Revenue Account and to ensure that tenants on community heating are not subsidised for the increase in energy costs that all other tenants are experiencing and that support is out in place to work with any tenant facing hardship to ensure any available help available is identified.

10.4

Alternatives Considered and Rejected

10.4.1

Consideration was given to either not increasing the prices, or only increasing them a smaller amount now to minimise impact on tenants who have community heating. This was rejected as this would in effect mean we are subsidising community heating tenants over all other tenants. There is also the risk that prices will continue to rise and that a smaller increase now would just mean needing an even larger increase later.

7.1

The Service Manager introduced the report which proposed a price increase in October 2022 for Community heating charges; to mitigate the risk that the significant energy price changes over the last 6 months has now put on the Community Heating Account.

The current energy crisis puts Sheffield City Council and many other authorities in a very challenging position, the point at which we forecast costs for this year was at a point at which the true cost of gas was still largely unknown. Forecasts ranged daily with a lack of any certainty at a fixed point. A price increase was recommended to full cabinet based on the information at the time which was an assumed increase of 37%. The actual increase is now 107%. Charges are still fluctuating as the crisis is ongoing and further increase will be needed next year.

If charges to customers are not increased, the current forecast estimates that there will be a short fall of more than £1 million, by the end of the current financial year in the community heating account, which would need to be supported by the HRA or General Fund, until it could be recovered.

7.2

RESOLVED: That Housing Policy Committee:-

1.     Approve that the standing rate change remains fixed at £4.90 per week for the duration of the financial year and the kWh charge is increased from 5.69p per kWh to 12p per kWh from October 2022.

7.3

Reasons for Decision

7.3.1

It is widely documented that the energy price cap will be increased again in October, whilst community heating does not fall under the price cap at this time, it is a clear point for all other customers that at this stage they can expect to see prices increase. Consumption is also at the lowest in the summer months and changing prices now will not have as much impact. The recommendation to increase the prices is required to relieve the pressure on the Housing Revenue Account and to ensure that tenants on community heating are not subsidised for the increase in energy costs that all other tenants are experiencing and that support is out in place to work with any tenant facing hardship to ensure any available help available is identified.

7.4

Alternatives Considered and Rejected

7.4.1

Consideration was given to either not increasing the prices, or only increasing them a smaller amount now to minimise impact on tenants who have community heating. This was rejected as this would in effect mean we are subsidising community heating tenants over all other tenants. There is also the risk that prices will continue to rise and that a smaller increase now would just mean needing an even larger increase later.

(NOTE: The result of the vote on the resolution was FOR - 1 Member; AGAINST - 0 Members; ABSTENTIONS – 7 Members.)